Protecting local manufacture in international trade agreements
Authors: Guido Torelli
Journal: The Lancet Global Health (2023)

Your timely Editorial highlights the varied and complex challenges to local production and technology transfer, particularly for biological therapies. These challenges were all witnessed during a 15-year WHO technology-transfer project for an influenza vaccine, which aimed to improve the capacity in low-income and middle-income countries to respond to influenza pandemics.1VaccineTransfer of technology for pandemic influenza vaccine production in developing countries.https://www.sciencedirect.com/journal/vaccine/vol/29/suppl/S1Date: 2011Date accessed: June 3, 2023Google Scholar Financial sustainability is one of the major challenges for countries where biomanufacturing capacity is too small to generate substantial economies of scale. Various solutions are being discussed (eg, regional production, also known as pooled production), which are all likely to require government support—be it subsidies, tax rebates, or preferential purchasing. However, a more elusive and potentially crucial challenge is emerging. The confusing fact that South Africa buys pneumococcal vaccines from India rather than buying vaccines produced locally is because “procurement decisions […] were governed by an Act of Parliament”.2Cullinan K Despite hosting mRNA hub, South Africa buys vaccines from India—highlighting tension between price pressures and local production.https://healthpolicy-watch.news/despite-hosting-mrna-hub-south-africa-buys-vaccines-from-india-highlighting-tension-between-price-and-local-production/Date: 2023Date accessed: June 3, 2023Google Scholar South Africa is apparently “in the process of reviewing its procurement policy to support local production”.2Cullinan K Despite hosting mRNA hub, South Africa buys vaccines from India—highlighting tension between price pressures and local production.https://healthpolicy-watch.news/despite-hosting-mrna-hub-south-africa-buys-vaccines-from-india-highlighting-tension-between-price-and-local-production/Date: 2023Date accessed: June 3, 2023Google Scholar Such policies imply that public tendering is restricted internally or is limited to, as an example, a regional production hub to support local production and help developing industries by protecting them from competition. This process implies the acceptance of paying increase prices. South Africa did have such a protectionist public-procurement policy but the Supreme Court abolished the policy in 2017,3Allen A South Africa to make local content in procurement compulsory.https://www.cips.org/supply-management/news/2023/march/south-africa-to-make-local-content-in-procurement-compulsory/Date: 2023Date accessed: June 3, 2023Google Scholar revealing the complexity of the issue that can be controversial and politically difficult. With increasing health-care costs and stagnating health budgets in low-income and middle-income countries, how is this justified? Where will the money come from? Although this perspective is rarely present in the global health debates, it has been an important part of global trade discussions for many years. High-income countries have been promoting the liberalisation of government procurement policies initially through the World Trade Organization (unsuccessfully,4World Trade OrganizationParties and observers.https://www.wto.org/english/tratop_e/gproc_e/memobs_e.htmDate: 2012Date accessed: June 3, 2023Google Scholar due to resistance from low-income and middle-income countries) and have been trying to introduce it into bilateral and multilateral trade agreements to divide opposition and slowly diminish resistance. The South Centre warned of the development risk from liberalising public procurement in agreements with the EU in 2008.5South CentreGovernment procurement in economic partnership agreements and FTAs.https://www.southcentre.int/wp-content/uploads/2013/05/PB15_Government-Procurement-in-EU-EPA-and-FTA-Agreements_EN.pdfDate: 2008Date accessed: June 3, 2023Google Scholar In the meantime, agreements including public procurement continue to be negotiated (eg, EU-Mercosur) and signed (eg, EU-Viet Nam). Pushback to EU trade policies is increasing, with even the European Parliament calling for a reorientation of the EU trade policy to help countries to protect their developing industries.6European ParliamentReport on the future of EU–Africa trade relations.https://www.europarl.europa.eu/doceo/document/A-9-2022-0169_EN.htmlDate: 2022Date accessed: June 3, 2023Google Scholar There is strong support for local production, but public health leaders should work with the relevant sectors in their government and their regional associations to ensure that local production is protected. I declare no competing interests.